European Butadiene Prices Inches Lower in April 2023, Asia Prices Witness Minimal Changes

Butadiene prices have showcased minor fluctuation in Asian and European markets during the last week of April 2023. In the European market, Butadiene prices have fallen due to dull demand and ample supply. In addition, macro factors such as high inflation, volatility in energy cost, and deterred purchasing sentiment have a cumulative impact on the downshift observed in the price realization of Butadiene. Meanwhile, Butadiene prices remained stable in the Asia market due to stagnant demand and supply dynamics.

A drop in demand from downstream Synthetic Rubber, particularly from Synthetic Butadiene Rubber (SBR) along with Poly Butadiene Rubber (PBR) industries, has restricted the manufacturers to active procurement of Butadiene in the European market. On the upstream front, Crude Oil prices have declined over the past few weeks, which proportionally impacted the production cost of Butadiene in the region. As a result, the prices of Butadiene have inched lower. At the same time, import flow has been steady in European ports as demand in the Asian market remained subdued, and Asian exporters sought to take advantage of better arbitrage by sending material to European shores. This has resulted in better-imported material availability in the regional market. On the other side, the impact of inflationary pressure has not yet subsided, resulting in weakened purchasing sentiments in the region. As per the sources, Eurozone inflation increased from 6.9% to 7% in May 2023. Moreover, the European Central Bank (ECB) hiked its key interest rates by 25 basis points to rein in spiraling inflationary pressure in the region. Additionally, the Eurozone manufacturing purchasing managers' index was below 50 (i.e., 45.8), indicating a contraction in manufacturing and industrial activities. Thus, prices of Butadiene FD Hamburg were settled at USD 895/MT with a week-on-week decrement of USD 20/MT during the week ending 28th April. 

Although, in the Chinese market, demand for Butadiene from the downstream value chain Synthetic Rubber and polymer industries has remained moderate, while the excessive supply in the domestic market forces the manufacturer to keep their Butadiene prices flat for this week. In addition, Shenhua Ningxia Coal in Ningxia China, having a production capacity of 65,000 MT/year, shut down their Butadiene plant on 17th April 2023 due to maintenance turnaround. The plant is expected to restart at the mid of May 2023. Thus, prices of Butadiene CFR Qingdao were assessed at USD 1059/MT, with no major changes in the prices, compared with the previous week.

In light of recent developments, ChemAnalyst predicts that the prices of Butadiene will continue to face pressure due to a decrease in new queries from downstream industries. Additionally, if the ECB decides to increase interest rates further to combat inflation, manufacturing firms' profitability will likely be hindered, ultimately leading to a slowdown in the market fundamentals of Butadiene in the near future.